The Nifty IT index dropped to 26,208.50- its lowest level since April 2023- in intraday trade on Tuesday, 30 June. The index finally ended with a hefty loss of 2.73% at 26,299, with only one component- Persistent Systems (up 0.65%)- out of the total 10, in the green. LTM (down 4%), TCS (down 3.17%), and Infosys (down 3.50%) ended as the top laggards in the index.
The IT pack has lost 30% this year so far, featuring as the worst sectoral performer in the first half of calendar year 2026 (H1CY26). Nifty 50, on the other hand, has declined 9% year-to-date.
From its peak of 46,089, scaled on 13 December 2024, the IT index is now down 43% due to a plethora of headwinds- from global macroeconomic concerns, weak demand, earnings growth-valuation mismatch, to artificial intelligence (AI)-led disruption.
The Q4FY26 performance of the was mixed. Demand remained subdued due to cautious discretionary spending by global clients amid geopolitical and geoeconomic uncertainties. Some companies, however, showed strength in deal wins and growing interest in AI-led transformation, cloud migration and cybersecurity services.
Guidance across tier-1 IT companies was cautious, reflecting continued softness in discretionary demand, client-specific ramp-downs and AI-led productivity pass-throughs.
Is it the right time to buy IT stocks?
While many experts and fund managers view IT as a contrarian investment opportunity at this juncture, the sector remains a stock-specific play rather than a broad-based bet.
The sector is undergoing a structural change rather than a temporary consolidation, with experts anticipating a 2–3% annual deflation in traditional IT services revenues over the next few years due to the impact of AI.
However, opportunities also persist for long-term investors. For example, AI-led services could create a market of $300–400 billion by 2030.
Experts say while the opportunity is real, the timing is not.
“Right now, deal wins, order book momentum, and FY27 guidance from TCS, Infosys, HCL Tech, and Wipro matter more to the market than headline earnings numbers. Companies that are genuinely monetising AI – not just talking about it – will be re-rated first. The others will wait,” , Founder and CEO of Octanom Tech and Hedged.in, told Mint.
Ghose believes value buyers will eventually return to IT. But for most stocks, that level of attractive entry could still be 15–20% lower than current prices.
“Watch deal flow data, management commentary on AI revenue contribution, and Accenture’s quarterly numbers as leading indicators before positioning meaningfully,” Ghose said.
Ravi Singh, Chief Research Officer at Master Capital Services, said that the next few quarters may remain gradual rather than explosive for the sector, as clients are still taking longer to make technology spending decisions.
However, improving global economic conditions and rising AI adoption could support growth over the medium term.
“At the current situation, investors can prefer quality large-cap IT names such as TCS and Infosys, which continue to benefit from strong client relationships, healthy order books and their ability to capitalise on emerging technology opportunities,” said Singh.
As per Kunal Bajaj, a research analyst at Choice Institutional Equities, valuations have turned more reasonable, and the risk-reward is increasingly favourable. However, investors should prefer companies with strong deal momentum, credible AI execution capabilities and attractive valuations.
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Disclaimer: This story is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.